Long before Carl Paladino referred to gay people as "dysfunctional," he made money off of them, collecting rent from two gay clubs located in buildings he owned in downtown Buffalo, N.Y.

According to a report in the New York Daily News, in 2004 and 2005, Paladino's son William ran the gay bar Cobalt, which was housed in a building owned by one of Paladino's many companies, Huron Group LLC. The club was run under another corporate name.

In 2005 the club began catering to straight clientele.

But his relationship with the gay club industry didn't stop there, because he also owned a building that housed Buddies II, operated under the name Queen City Entertainment in 2005 and 2006.

Paladino's spokesman, Michael Caputo, declined to comment on the report. The report comes one day after Paladino apologized to gay people for what he called his "poorly chosen words."